Related

Rafah, Egypt; and Gaza City, Gaza — As Egypt's closure of some of the smuggling tunnels from Gaza drives up prices in the tiny coastal enclave, it has also spurred anger toward Egypt’s new Islamist president for throttling one of Gaza's main sources of goods.

Egypt began destroying tunnels as part of a security crackdown in the Sinai after militants attacked an Egyptian army checkpoint near Rafah on Aug. 5, killing 16 Egyptian soldiers before crossing the border to attack Israel.

The operation has slowed the tunnel trade, leading to price increases in Gaza on items like building materials and food. The Hamas government has protested the closure of tunnels, but it has also used the opportunity to press Egypt to allow legal trade between the two sides and abolish the tunnels entirely.

While Hamas, an offshoot of Egypt’s Muslim Brotherhood, might have expected a friendlier partner across the border when the Brotherhood’s Mohamed Morsi became president, President Morsi has rebuffed the request for a free trade zone while clamping down on smuggling.

The new president is simply putting his interests, and those of Egypt, ahead of ideological connections with Hamas, says Khalil Al Anani, a scholar at Durham University in Britain who studies Islamist groups.

“I don't think that President Morsi will jeopardize his political position in Egypt to satisfy Hamas,” says Dr. Anani. “Some people mix between the ideological relationship between the Muslim Brotherhood in Egypt and Hamas in Gaza. When it comes to reality, politics is the main thing, not ideology.”

A boon for one party

The tunnels have been a vital part of Gaza’s economy since Israel began a siege of the coastal enclave in 2007, when Hamas, which maintains an armed wing and whose charter calls for the destruction of Israel, came to power in Gaza. While Israel has since greatly relaxed the blockade, and sends in hundreds of truckloads of basic goods like food every day through the Kerem Shalom crossing, Gaza still depends on the tunnels, especially for goods Israel doesn’t allow, like building materials.

On the Egyptian side, the tunnel trade has largely flourished in the lawless northern Sinai, where both smugglers and militants have operated with increasing freedom in a security vacuum since the uprising that toppled former president Hosni Mubarak last year. But the August attack that killed 16 soldiers spurred Morsi to assert authority in Sinai, and he sent thousands of troops into the peninsula.

After the attack, the Hamas government quickly closed the tunnels to human traffic to prevent suspects from fleeing to Gaza, and announced it did not support attacks on Israel from its neighbor's territory.

Unplacated by Hamas's moves, Egyptian security forces destroyed several dozen tunnels, and increased patrols in the area near the border. While many tunnel owners have now resumed business, many work only at night, when police rarely venture into the area. The reduced capacity, and increased risk, has seen smuggling costs soar.

Abu Ayyad, an Egyptian who shares ownership of a tunnel with Gazan partners, says he used to charge $15 for transporting one ton of cement through his tunnel. After the military operation, he doubled his rate. He used to send goods underground, mostly food and building supplies like cement and steel, 24 hours a day, but now he opens the smuggling route only at night for fear of security forces.

Daunting price spikes

While he is profiting from the new situation, those on the Gazan side are bearing the brunt of the price increases. “The prices of everything coming from Egypt have skyrocketed,” said Ahmed Ashour, a sound technician who works in Gaza City. “Two days ago, I went to buy a shirt for my little son and I was astonished when I was told it is worth 60 shekels [about $15], when I used to buy the same shirt for 40 shekels.”

Nearly two thirds of Gaza’s population is unemployed, and nearly 40 percent live below the poverty line, making price hikes especially debilitating. “Egypt is to blame for closing the tunnels, but our governments are also responsible for us and they should do everything possible to end our suffering,” says Mr. Ashour.

Mohamed al-Aila, a cement importer in Gaza, says cement prices have risen by 50 percent since the Egyptian army began targeting the tunnels. Building materials, like cement and steel, are some of the main goods imported through the tunnels. Israel generally prohibits such materials to be sent into Gaza through the Israeli-controlled crossings because it fears they could be used to create weapons or fortifications.

“It’s really difficult for me to bring more goods into Gaza, because most of the tunnels I used to use were destroyed,” says Ashour. He complains that he has to pay more to the tunnel owners who are working to transport the cement, and that the Egyptians who sell him the cement have also raised their prices, claiming it has become more difficult to smuggle goods into Sinai. “If things go on like this, I guess the already struggling economy of Gaza will collapse, and my business will be down,” he says.

A bold proposition

Tarek Lubbad, spokesman for the Hamas government’s economic ministry in Gaza says monthly imports of construction materials are down by 45 percent, while basic food imports are down by 31 percent since the tunnel closures.

To solve the issue of the tunnel trade, which poses a security risk to Egypt because of the weapons and militants who can pass beneath the border, Hamas has proposed closing the tunnels altogether and opening a free trade zone on the border to allow goods into Gaza legally.

Hamas officials say Khaled Meshaal, the group’s political leader, discussed the idea with Egyptian intelligence several weeks ago and were rejected, but Morsi’s spokesman dismissed the idea, saying it was never officially discussed.

Even as he deals with a security problem in the Sinai, Morsi is “trying to reposition himself as a president for all Egyptians, not as a Brotherhood president,” says Anani. Granting Hamas's request would undermine that effort, says Anani, because his opponents will accuse him of appeasing Hamas at the expense of Egyptian interests.

Egyptian officials have long feared that opening trade with Gaza would allow Israel to close its border with Gaza and pass on the responsibility of meeting Gaza's humanitarian needs to Egypt.

In recent weeks, Hamas has called several protests against the tunnel closures, with leaders of the organization holding sit-ins in Rafah, near the tunnels.

“We have told Egypt that we can destroy the tunnels if they provide us with another alternative,” says Mr. Lubbad. “The tunnels are the only lifeline for us here and the closure of the tunnels means the death of Gaza. We appeal to the Egyptian leadership to reconsider its decision to destroy the tunnels that provide the besieged Palestinians with food and construction materials. I don't believe that the new leadership will help Israel tighten the siege on Gaza.”